Catch-22 of Marketing Sports Equipment: New Riddell Lawsuit

In an ideal world, products liability and other consumer protection lawsuits should make products safer in the long run.  However, there are often instances where they actually encourage companies not to innovate and improve safety.  For instance, the sports equipment companies who want to design safer products (e.g., helmets) must sink a lot of money into research and design of safer products.  Yet, at the end of the day, a new and improved product won’t look much different from the old ones competitors will sell at a cheaper price.

The solution is, of course, advertising the benefits of the new and improved product.   Or is it?

Advertising safer products presents a Catch-22 for companies.  If they don’t advertise, consumers are less likely to buy the new and improved product.  This may reduce the incentive to invest in developing safer products.  Yet, if they do advertise their product as “safer,” they’ll almost certainly be sued over that advertising down the line if someone is injured while using their new product.

Such is life for Riddell, Inc., one of the world’s leading manufacturers of football helmets.  For years, it has faced a barrage of concussion lawsuits.  In the last decade, it has attempted to improve the safety of its helmets by designing new and ostensibly safer models, one of which was called the “Revolution” helmet.  Unsurprisingly, it is now being sued over its marketing of that helmet.

Earlier in December, the case of Thiel vs. Riddell, Inc., et. al., 1:13-cv-07585, was filed in federal court in New Jersey.  According to the lawsuit:

[Riddell] in a engaged a scheme to mislead New Jersey consumers about the benefits of their premium-priced helmet by falsely advertising to New Jersey consumers that the Revolution helmet is manufactured with “concussion reduction technology” which reduces the incidence of concussion, and does so by up to 31%

The suit contends that marketing of the Revolution helmet was intended to and did create the perception among purchasers that the helmet better reduced the chance of concussion than lower priced helmets.  Plaintiff further contends that Riddell relied upon a study by the University of Pittsburgh Medical Center to make the claim of a 31% reduction in concussions but that such study was fatally flawed and Riddell was aware of this fact. We don’t have enough facts to make any sort of assessment as to the merits of the case, but it does reenforce the dangers in marketing innovative safety equipment.  Notably, the marketing video for Riddell’s new top of the line helmet, the “360″, focuses more on the features of the helmet without being very specific about its benefits.  Of course, we can still see a Plaintiff claiming that it creates the perception that the helmet reduces chances of concussions.  Then again, isn’t that the point?

Gas Cans Under Fire, Again

We’ve previously written about the alleged dangers of portable gas cans and the 5 cent part that could make them safer.  Last week NBC’s Today Show ran an interesting segment showing some of the scientific testing that has been done with regards to the potential for explosion.   According to the segment, there have been 11 reported deaths and 1,200 emergency room visits involving gas can explosions during the pouring of gasoline since 1998. The  danger allegedly stems from what is known as “flashback.”   Tests conducted at Worcester Polytechnic Institute’s labs show that under certain limited conditions a flashback explosion can occur inside a plastic gas can, when gas vapor escaping the can contacts a source of ignition such as a flame or a spark.  From the testing, it appears that this only happens when there is a small amount fuel left in the can and it is tilted a severe angle.

The solution that has been proposed by a number of experts and plaintiff’s attorneys is a what is known as a “flame arrester.”  It is basically a metal mesh plug that keeps a flame ignited outside of the can from traveling into the can and causing an explosion.   The “gas can industry” is supposedly still looking into whether flame arresters are necessary or effective.   All gas cans currently have general safety warnings printed on them telling users to keep away from flames and electric motors.

The Consumer Products Safety Commission’s official position since 2009 has been that is that it is investigating whether flame arrester should be mandatory.  However,  a spokesperson from the CPSC recently told USA Today that they would like to see  standards commission incorporate flame arrestor technology in consumer gas cans.

 

A Book Fair – Google Books Ruled Fair Use

It seems these days there is a very fine line between an innovator and a thief.   Google recently was found to be on the innovator side of the line in a lawsuit over its product Google Books.  As you may have heard, the U.S. District Court for the Southern District of New York recently held in its summary judgment opinion that Google’s scanning of more than 20 million books and posting them online was “fair use” under U.S. copyright law. See The Authors Guild, Inc., et al v. Google, Inc., No. 05-CIV-8136 (S.D.N.Y. Nov. 14, 2013). This case began nearly a decade ago when Google when began scanning and uploading “snippets” of books online without the permission of the authors and publishers.  In 2005, the Authors Guild brought suit against Google seeking $750 per book scanned.  As you might imagine, twenty million books at $750 per book adds up pretty quickly ($15 billion to be precise).  The two sides sought to settle the matter in 2011 for around $125 million.  However, the U.S. District Court judge refused to approve the settlement, holding that it would give Google a ”de facto monopoly” to copy books en masse.

The ruling in this case centered around whether Google’s use of the copyrighted books constituted “fair use.”   The doctrine of fair use permits the use of copyrighted works “to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts.’”  One key consideration in determining whether use falls under “fair use” is the extent to which it is transformative.  The use of work is transformative where it adds something new or alters the original creation.

The Court’s opinion focused largely on  the fact that Google Books was indeed transformative in that it “transformed book text into data for purposes of substantive research, including data mining and text mining in new areas, thereby opening up new fields of research.”   The Court ultimately held that this transformation, which adds value to the original books, along with other factors outweighed any commercial aspect of the use.  As such, it granted summary judgement to Google.

This ruling has been hailed by some as a win for the fair use doctrine, tech companies, and society at large.  We tend to agree.  However, there will undoubtedly be many who view this case as just another instance of the big companies and the court system stepping on the little guy.

Call me Justice . . . Captain Justice!

I’ll admit it.  My former life took place in a world where it was uncommon for lawyers to be referred to as “Captain.”  However, it was not some weird lawyer Comic-Con.  Rather, it was the United States Air Force, where most of the lawyers are junior officers known as Captains.   Apparently, there’s a lawyer, Drew Justice of Tennessee, who also wants to be referred to in the courtroom as ”Captain” -”Captain Justice,” to be exact.  Mr. Justice is neither a military officer nor a super-hero.  He’s just a criminal defense lawyer with some creativity and a dream.

This bizarre request actually stems from a prosecutor’s request for the judge stop Mr. Justice from referring to the prosecutors as “The Government.”  The rationale being, of course, that everyone hates the government and Mr. Justice was using the term in a derogatory fashion.  Mr. Justice was not pleased with this request.  Rather than simply acknowledging that the prosecution is an arm of the government or that the prosecution’s request implicated the First Amendment, he went a step further and got creative.

Here’s a list of the creative new titles he requested that the Court use if he could no longer refer to the prosecution as “the government:”

  • Rather than “the defendant” his client should be known as “Mister,” “the Citizen Accused” or “that innocent man;”
  • Rather than being called defense counsel or counsel for the defendant, he should be known as “Defender of the Innocent” but conceded that he would also alternatively accept ”Guardian of the Realm;”
  • When being referred to specifically by name, he requested to be called “Captain Justice.”

The tongue in cheek nature of his request certainly gets the point across, but it is doubtful that the court found it too amusing.  Still, it is hard not to laugh when reading the conclusion of his filing:

“WHEREFORE, Captain Justice, Guardian of the Realm and Leader of the Resistance, primarily asks that the Court deny the State’s motion, as lacking legal basis.”

“MZU SUX” License Plate – Obscene or Funny?

Does the word “sucks” have an obscene connotation?  That is a question recently addressed by a Missouri Court of Appeals.  The case stems from a personalized Missouri license plate obtained by a University of Kansas Jayhawks fan.  This license plate read “MZU SUX”  (shorthand for Mizzou Sucks), which was an obvious shot at the Jayhawks’ rival the University of Missouri.  The court of appeals held that the fan could keep the plate.

The plate’s owner obtained it in 2009 through the normal application process for obtaining a personalized state issued license plate.  However, shortly after the plate was issued, the Missouri Department of Revenue attempted to recall the plate, citing a statute that says no personalized license plate shall be obscene or profane.  The owner argued that in recent decades the term “sucks” has come to mean “subpar” and that the license plate was intended to be funny.  At an administrative hearing on the matter, the commissioners agreed and ruled that term “sucks” was not obscene. The Department of Revenue appealed the commission’s ruling to the court of appeals, which didn’t exactly answer the question of whether “sucks” was an obscene word.  Instead, it deferred to the commission’s decision on the grounds that there was an adequate basis for its ruling and that it would not substitute its own opinion for that of the commission.

The Court noted, however, that “another fact finder may have found otherwise.”

The whole case is a little silly, but I guess we can score this as a victory for free speech.  At minimum, it’s a victory for those who believe that Mizzou is “subpar.”

The case is Gettler v. Director of Revenue, No. WD 75783 (Mo. Ct. App. Oct. 15, 2013).

 

Mayweather Scores Knockout In Lawsuit

Floyd Mayweather followed up his recent victory in the ring against Canelo Alvarez with a victory in the courtroom against Anthony Dash.  Dash filed a lawsuit against Mayweather and World Wrestling Entertainment (WWE) alleging that they violated his copyright by playing a variant of Dash’s music during Mayweather’s entrance at two WWE wresting events.

The Fourth Circuit recently upheld dismissal of the suit on the grounds that Dash failed to provide evidence of his damages .

By way of background, Dash composed an instrumental ”beat” in 2005 that he referred to as the “Tony Gunz Beat” or “TGB.”  He alleges that Mayweather and another individual co-wrote lyrics and recorded them over TGB to create song entitled “Yep.”  This song was played as intro music when Mayweather appeared at two WWE events, Wrestlemania and RAW, in 2008 and 2009.  Dash alleges that the use of “Yep” at the event infringed on his copyright and caused him economic damage of around $150,000.

In an lengthy opinion, the Fourth Circuit upheld the district court’s dismissal of the case on the grounds that Dash had not presented non-speculative evidence to support his claim for damages.   The district court had concluded that Dash was not entitled to actual damages because he had not offered “sufficient, concrete evidence to indicate an actual value of his beat.”  The Fourth Circuit noted that actual damages are to be calculated based on what a reasonable buyer would pay a reasonable seller.  Dash had presented an expert report stating that he could have received up to $3,000 for use of TGB if he had been paid a licensing fee.  However, the court found this report to be overly speculative.

The decision seemed to rest in large part on the fact that the value of songs are highly variable and depend on a number of factors.  Those factors include popularity of the work, the reputation of the songwriter, the presence of a released sound recording, and the possibility of a new recording in the studio.  The plaintiff’s expert failed to address these factors in reaching his opinion.

Of course, one could argue that trying to determine value of any song, whether from a well known artist or not, is highly speculative.  Music labels sign hundreds of artists per year hoping that one or two can become next Coldplay or Carrier Underwood.  While most don’t make it big, the ones that do tend to make it really, really big.  Figuring out which ones make it and which ones don’t is the hard part. Either way, it’s nice to see the that Mayweather can get back to more important things like attempting to win money on the shoulders of Johnny Football.

 

 

 

Fox News Finds Itself in Intellectual Property Battle

For the past few years, it has seemed liked Fox News spends more time in the news than reporting (and opining) on the news.  Once again, the network is back in the headlines, but this time, it stems from an intellectual property lawsuit against a company called TVEyes.  In a nutshell, TVEyes transcribes thousands of TV and radio broadcasts to make them text searchable and then sells access to the transcripts.  Fox News claims that the transcription of its broadcasts infringes on its intellectual property rights. The case, Fox News Network LLC v. TVEyes Inc. (No. 13-CV-5315), was filed in the U.S. District Court for the Southern District of New York.  According to the complaint,  TVEyes is willfully and deliberately infringing on Fox News’ copyrights and is misappropriating its “hot news” content.  It then allegedly distributes that content to subscribers over the Internet for a fee.  Fox News further alleges that TVEyes is “well aware” it needs a license or authorization from Fox News in order to reproduce its content in this manner. Apparently, TVEyes allegedly contacted Fox News seeking a license for its use of Fox News content, which Fox News declined to provide.

According to its website, the mission of TVEyes is “to organize the world’s television and radio broadcasts and make them universally searchable by the spoken words.”   Fox News’ complaint alleges that TVEyes charges users a subscription fee of $500 per user per month.  This is not some fly-by-night company, either.  Its customers include the United States Department of Defense.

Fox News pulls no punches in describing TVEyes’ business model.  The complaint argues that “TV Eyes engaged  in the parasitic business of offering and providing the public for a fee copies of the television programing and content created by others.”  Fox News wants an injunction, as well as unspecified statutory and punitive damages.  It is notable that Fox News does indeed have its own service that sell transcripts of its programing. TVEyes has already filed its motion to dismiss.  In the motion, TVEyes asserts that the Fox News’ claims are barred by the Copyright Act and the complaint fails to state a claims for “hot news” misappropriation.  A plaintiff alleging “hot news” must show “time-sensitive factual information, free-riding by the defendant, and threat to the very existence of Plaintiff’s product.” We’ll keep our eyes on this lawsuit.

Exotic Dancers Suing for Minimum Wage in New York

In a recent Fair Labor Standards Act (FLSA) case in the U.S. District Court for the Southern District of New York, a federal judge ruled in favor of class of strippers exotic dancers and determined that they were actually employees rather than independent contractors.  According to Law360, the facts were these: Former exotic dancers at Manhattan strip club gentlemen’s club Rick’s Cabaret brought a minimum wage class action against club operator Peregrine Enterprises Inc.  Seriously? Exotic dancers at a very popular club in Manhattan are suing over minimum wage?  I suppose no professions are immune from economic downturns. Because of their independent contractor status, the plaintiffs weren’t paid wages while working at Rick’s, but instead, received “performance fees” for “dances” with customers.  However, the named plaintiffs argued that they truly were employees of Rick’s and were therefore entitled to a minimum wage.  U.S. District Judge Paul Engelmayer agreed with the plaintiffs and ruled that they were, in fact, employees of the midtown Manhattan club and that Peregrine was their employer.

In reaching his decision, the Judge applied the five factor “economic realities” test.  Of course, that is a standard test to determine whether agents of a business are employees or contractors.  The test has nothing to do with the economic realities of whether an exotic dancer should be entitled to the minimum wage. While the outcome of the case appears favorable the dancers, the judge wasn’t quite ready to make it rain just yet.  Although he ruled that the dancers were employees, he refused to grant summary judgment because a question remained as to whether they are solely employees of Peregrine or whether they were also employees of Rick’s Cabaret International Inc. and RCI Entertainment (New York) Inc. We’ll have to keep a close eye on the future of this litigation, won’t we?

The case in question is Hart v. Rick’s Cabaret Intern., Inc., — F. Supp. 2d —-, No. 09 Civ. 3043-PAE (S.D.N.Y September 10, ,2013).

The Google Wi-Fi Litigation

Google claims it made an honest mistake in 2010 when its Street View cars were collecting too much data. Instead of just obtaining the bare minimum data needed to map out the locations of Wi-Fi networks, the cars allegedly unintentionally collected “packet” data that contained private user information.  Armed with Google’s admission that it had, at a minimum, made an honest mistake, class-action lawyers pounced, alleging violations of federal anti-wiretapping laws.  According to Reuters, Google’s attempts to have the cases dismissed were recently denied.

Google sought dismissal of the cases on the grounds that the old pre-Internet telephone privacy laws don’t apply. In so doing, Google argued that dismissal was appropriate because data transmitted over a Wi-Fi network is readily accessible to the public. Alternatively, it said the Wi-Fi data could be considered an unencrypted “radio communication,” which means it would not be subject to liability under the wiretapping law.  However, District Judge James Ware disagreed with Google’s contention and held that the cases could move forward.

Google appealed, and the Ninth Circuit ultimately agreed with the district court. The Ninth Circuit found that the data collected by Google didn’t fit into either category; it was neither a ”radio communication” nor an “electronic communication”  The ruling also rejected the idea that Wi-Fi data is “readily accessible” because most of the general public lacks the expertise to intercept and decode payload data transmitted over a Wi-Fi network.

The case in question is Joffe v. Google, Inc., — F.3d —-, No. 11–17483 (9th Cir. Sept. 10, 2013), which affirmed In re Google Inc. Street View Electronic Communications Litigation, 794 F. Supp. 2d 1067 (N.D. Cal. 2011).

Sending Texts To Those You Know Are Driving Could Prompt Liability

In an interesting ruling earlier this week, a New Jersey appellate court held that you don’t have to be driving to get in trouble for sending a text message.   You can potentially be held legally liable for sending a text message to someone who is behind the wheel and causes an accident.  This ruling seems to open a whole new battlefield in the war on texting and driving. The Appeals Court agreed with the argument made by two Plaintiffs that were seriously injured in a crash with a teenager whose truck swerved across the center line and hit them riding on their motorcycle. The Plaintiffs settled with the driver, but they also sued his girlfriend for their injuries.  She allegedly texted him just moments before the crash. The court didn’t find the girlfriend liable because she didn’t appear to know her boyfriend was driving at the time.  Nevertheless, the judges accepted the general argument that a text sender may bear some legal liability if they know the relieving party is driving.  The opinion stated:

We conclude that a person sending text messages has a duty not to text someone who is driving if the texter knows, or has special reason to know, the recipient will view the text while driving.

This is certainly an interesting new duty placed on non-driving texters.  Even if there is such a duty, one must wonder whether the sending of the text would be considered the proximate cause of any accident.  After all, wouldn’t the driver’s act of accessing and reading the text be the proximate cause of the accident, not necessarily the person sending the text? And how would the non-driving texter’s purported knowledge of the recipient’s driving be litigated under the circumstances? This opinion should make for some interesting future litigation.

The opinion is Kubert v. Best, — A.3d —-, No. A-1128-12T4, (N.J. Ct. App. Aug. 27, 2013).